BILL ANALYSIS �
SB 692
Page 1
SENATE THIRD READING
SB 692 (Hancock)
As Amended August 12, 2013
Majority vote
SENATE VOTE :37-0
LOCAL GOVERNMENT 9-0
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|Ayes:|Achadjian, Levine, Alejo, | | |
| |Bradford, Gordon, | | |
| |Melendez, Mullin, Rendon, | | |
| |Waldron | | |
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SUMMARY : Expands powers of local agencies to use the Mello-Roos
Community Facilities Act of 1992 and the Marks-Roos Local Bond
Pooling Act of 1985. Specifically, this bill :
1)Authorizes pursuant to the Mello-Roos Community Facilities Act
(Mello-Roos), a community facilities district (CFD) to finance
the maintenance and operation of any real property or other
tangible property with an estimated useful life of five or
more years that is owned by the local agency or by another
local agency through an agreement, as specified.
2)Defines "maintenance" to include "replacement, and the
creation and funding of a reserve fund to pay for a
replacement."
3)Authorizes a joint powers authority (JPA) to lease lands,
structures, real or personal property, rights, rights-of way,
franchises, easements, and other interests in lands that are
located within the state that the JPA determines is necessary
or convenient in order to finance a public capital improvement
pursuant to the Marks-Roos Local Bond Pooling Act
(Marks-Roos).
4)Authorizes the local agency by written consent and the
unanimous approval of affected parcel owners to eliminate
types of facilities and services in a CFD that initially
consists solely of territory proposed for annexation to the
CFD in the future, as authorized by current law. States that
no additional hearing or procedures are required. Requires
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the unanimous approval to contain specified provisions if the
unanimous approval relates to the reduction of a special tax
rate and the special tax is being used to retire debt.
5)Authorizes a legislative body by ordinance, following the
creation of a CFD that includes territory proposed for
annexation in the future by unanimous approval as specified,
to levy special taxes on parcels that will be annexed to the
CFD at the rate to be approved unanimously by parcel owners
and for the apportionment and collection of the special taxes
in the manner specified in the resolution of formation.
6)Authorizes the local agency, in connection with the annexation
by unanimous approval to a CFD of a parcel included in
territory proposed for annexation in the future to the CFD as
specified, to designate parcels as an improvement area within
the CFD. Requires the designation of parcels as an
improvement area to be specified and approved with unanimous
approval of parcel owners at the time that the parcels are
annexed to the CFD. States that no additional hearings or
procedures are required. Specifies, after the designation of
parcels as an improvement area that the following shall only
apply to the improvement hearing:
a) All proceedings for approval of the appropriations
limit;
b) The rate and method of apportionment and manner of
collection of special taxes; and,
c) The authorization to incur bonded indebtedness for the
parcel or parcels.
7)Provides that a resolution of intention shall not be obligated
to specify the conditions under which a special tax obligation
may be prepaid and permanently satisfied if the prepayment
provision is included in the unanimous approval of the owner
of each parcel at the time the parcels are annexed to the CFD.
8)Provides that provisions in existing law that allow a CFD to
finance facilities owned or operated by a public agency other
than the agency that created the CFD pursuant to a joint
community facilities agreement or joint exercise of power
agreement shall not be construed to limit the ability of a JPA
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to exercise powers authorized by the Joint Exercise of Powers
Act.
9)Authorizes a local agency, in connection with the issuance of
bonds where a property owner agrees to disclose certain
information through the Municipal Securities Rulemaking
Board's Electronic Municipal Market Access, to execute and
record in the county recorder's office a notice of the owner's
disclosure agreement for the purpose of providing a notice to
a subsequent transferee. Requires the owner's written consent
to be attached to the notice.
10)Provides that a subsequent transferee of the property shall
be subject to the disclosure obligation. Allows the local
agency, upon termination of the disclosure obligation, to
cause a notice of termination to be recorded with the county
recorder's office where the original notice was recorded.
Requires the county recorder's office to accept the
termination.
11)Makes technical and non-substantive changes.
FISCAL EFFECT : None
COMMENTS : The Mello-Roos Community Facilities Act allows
counties, cities, special districts, and school districts to
levy special taxes (parcel taxes) to finance a wide variety of
public works, including parks, recreation centers, schools,
libraries, child care facilities, and utility infrastructure. A
Mello-Roos CFD issues bonds against these special taxes to
finance the public works projects. Mello-Roos is an important
feature of the local fiscal landscape, providing local officials
with a key tool for accumulating the public capital needed to
pay for the public works projects that make new residential
development possible.
To initiate the formation of a CFD, a local agency's legislative
body must adopt a resolution of intention to establish the
district, which must do all of the following: describe the
district's boundaries; describe the facilities and services
proposed to be financed; state that a special tax, secured by a
lien against real property, will be annually levied; specify, in
detail, the rate, method of apportionment, and manner of
collections of the special tax; and, fix a time and place for
public hearing. After holding the hearing and considering
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protests, the legislative body, to establish the CFD, must adopt
a resolution of formation containing all of the information
provided in the resolution of intention; and, if a special tax
is to be levied, include additional information about the tax
levy.
SB 555 (Hancock), Chapter 493, Statutes of 2011, authorized the
use of Mello-Roos taxes to help finance renewable energy, water
conservation, and energy efficiency improvements on private
property. Supporters of SB 555 sought to simplify the process
by which property owners can voluntarily use Mello-Roos
financing. SB 555 authorized a separate procedure for
establishing a CFD that initially contains no parcels of land,
but consists only of territory from which parcels may
subsequently be annexed to the CFD with the unanimous approval
of parcel owners. Under this separate procedure, a resolution
of intention to form a CFD does not have to specify the rate or
rates of a special tax subject to specified requirements.
This bill makes several changes to allow a local agency's
legislative body to avoid public hearings or other procedural
requirements when using the separate procedure for establishing
a CFD with the unanimous approval of parcel owners pursuant to
SB 555 (Hancock). This bill allows facilities and services to
be eliminated in a CFD, allows a local agency to designate
parcels as an improvement area, and allows a local agency to
levy special taxes on parcel that will be annexed to the CFD
upon the unanimous approval of affected parcel owners. This
bill is author-sponsored.
This bill expands on the types of facilities that a CFD may
finance to include the maintenance and operation of any real
property or other tangible property with an estimated useful
life of five or more years that is owned by the local agency or
by another local agency through an agreement, as specified.
This bill defines maintenance to also include replacement, and
the creation and funding of a reserve fund to pay for a
replacement. Current law authorizes a CFD to issue bonds to
provide for the planning, design, purchase, construction,
expansion or rehabilitation of any real or other tangible
property with an estimated useful life of at least five years.
The Legislature may wish to consider if it is appropriate to add
maintenance and operation to the extensive list in current law
that a CFD can finance when it may be more appropriate to use
existing funds for these purposes.
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The Marks-Roos Act authorizes two or more public agencies to
exercise their common powers by signing joint powers agreements.
This agreement can create a JPA which allows local agencies to
use JPAs to finance infrastructure. The Marks-Roos Act
authorizes JPAs to issue bonds and loan the capital to local
agencies to finance public capital improvements, working
capital, liability, insurance needs, or other projects. Bonds
issued under Marks-Roos are secured by a variety of repayment
sources, including lease agreements. For example, a JPA can
issue a Marks-Roos bond and loan proceeds under lease
agreements. JPAs may lease the public capital improvements
being financed to a local agency, and charge and collect rent as
repayment of Marks-Roos bonds.
This bill allows JPAs to lease lands, structures, and real or
personal property that they deem necessary or convenient for the
financing of public capital improvements. Current law allows
JPAs to take title to or sell these types of interests. The
Legislature may wish to ask the author why JPAs need to be
granted additional authority to lease land or real property and
to provide examples as to why existing powers are not
sufficient.
Support arguments: Supporters argue that this bill makes
clarifications to existing law that governs the use of CFDs to
finance energy efficiency and water conservation projects.
Opposition arguments: Opposition could argue that this measure
adds operations and maintenance to the laundry list of services
that can be financed by Mello-Roos and that special taxes should
not pay for these new services and that funding for regular
maintenance programs should come out of existing funds.
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958
FN: 0001603